Correlation Between Ford and Ironbark Capital
Can any of the company-specific risk be diversified away by investing in both Ford and Ironbark Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Ironbark Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ironbark Capital, you can compare the effects of market volatilities on Ford and Ironbark Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Ironbark Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ironbark Capital.
Diversification Opportunities for Ford and Ironbark Capital
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Ironbark is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ironbark Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironbark Capital and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Ironbark Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironbark Capital has no effect on the direction of Ford i.e., Ford and Ironbark Capital go up and down completely randomly.
Pair Corralation between Ford and Ironbark Capital
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.64 times more return on investment than Ironbark Capital. However, Ford is 2.64 times more volatile than Ironbark Capital. It trades about 0.0 of its potential returns per unit of risk. Ironbark Capital is currently generating about -0.09 per unit of risk. If you would invest 1,122 in Ford Motor on August 29, 2024 and sell it today you would lose (12.00) from holding Ford Motor or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Ironbark Capital
Performance |
| Timeline |
| Ford Motor |
| Ironbark Capital |
Ford and Ironbark Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ironbark Capital
The main advantage of trading using opposite Ford and Ironbark Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ironbark Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ironbark Capital will offset losses from the drop in Ironbark Capital's long position.The idea behind Ford Motor and Ironbark Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ironbark Capital vs. Australian Foundation Investment | Ironbark Capital vs. GQG Partners DRC | Ironbark Capital vs. Metrics Master Income | Ironbark Capital vs. L1 Long Short |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |